- Markets still digesting Spanish request for aid
- Investors look ahead to Greek elections, Italian bond auction
- Miners and banks drop early on
London's blue-chip index opened flat on Tuesday morning with all eyes on the Eurozone following the recent Spanish request for aid and ahead of the crucial Greek elections at the weekend.
Stocks opened strongly yesterday after Spain requested a credit line of up to €100bn to help recapitalise its banks, but gains were quickly pared as the markets digested what this would mean in the longer term.
"There is still the Greece election this coming weekend and beyond this no shortage of concerns and areas of vulnerability throughout the Eurozone. This crisis will rumble on," said RBS's chief economist Andrew McLaughlin yesterday.
Italy also remains a worry for investors as the country's benchmark bond yields tracked Spanish rates higher yesterday ahead of a bond auction later this week.
International Monetary Fund (IMF) Managing Director Christine Lagarde has denied that there is a three-month make-or-break deadline for the euro despite billionaire investor George Soros's prediction last week that the Eurozone had only that much time to fix its problems.
Meanwhile, European Commission (EC) President José Manuel Barroso has called on EU leaders to take a "big step" and agree on a banking union to be implemented as early as next year.
FTSE 100: Miners, banks hit by risk aversion
Mining stocks were out of favour as investors shied away from risk on the back of the Eurozone uncertainty: Evraz, Kazakhmys, ENRC and Antofagasta were registering moderate falls in the opening hour, as too were potential merger partners Glencore and Xstrata.
In a research note this morning, Jefferies said that certain factors have reduced the pressure on Glencore to bump up its offer for Xstrata shareholders and said that the ratio of 2.8 Glencore shares
per Xstrata share is now expected to succeed.
Banks were also under some selling pressure early on with Barclays RBS and Lloyds among the worst performers. Lloyds is taking the first step to getting out of Japan after announcing the sale of its remittance business in the country. The group, which is 43% owned by the UK taxpayer, is selling GoLloyds to Shinsei Bank.
Supermarket firm Sainsbury was on the up after making a surprise move into the e-book retail market with the acquisition of HMV's stake in online venture Anobii.
Pharmaceuticals giant GlaxoSmithKline edged higher after signing an agreement to buy eczema treatment drug 'Toctino' from Basilea Pharmaceutica for an initial payment of £146m in cash.
FTSE 250: RPC, Spirit drop after results
Plastic packaging firm RPC Group slumped despite hiking its dividend after the successful acquisition of food packaging firm Superfos helped drive up profits in the year to the end of March.
Like-for-like sales growth slowed at Spirit as the pubs group ran into stronger comparatives from a year earlier, while things are getting worse in the group's leased estate, causing shares to fall early on.
Insurance group Amlin was a high riser after Deutsche Bank upgraded its rating on the stock to buy and lifted its target price from 420p to 435p. Meanwhile, airline easyJet was under the weather after a HSBC downgrade to neutral.
FTSE 100 - Risers
ICAP (IAP) 344.60p +2.16%
British American Tobacco (BATS) 3,163.00p +1.67%
Admiral Group (ADM) 1,091.00p +1.49%
Unilever (ULVR) 2,063.00p +1.23%
Schroders (Non-Voting) (SDRC) 995.00p +1.22%
Serco Group (SRP) 551.00p +0.92%
Vodafone Group (VOD) 172.60p +0.91%
Schroders (SDR) 1,257.00p +0.88%
Imperial Tobacco Group (IMT) 2,399.00p +0.88%
Severn Trent (SVT) 1,804.00p +0.84%
FTSE 100 - Fallers
Evraz (EVR) 264.90p -2.82%
Barclays (BARC) 185.80p -2.49%
ARM Holdings (ARM) 494.40p -2.20%
Royal Bank of Scotland Group (RBS) 216.70p -2.12%
Petrofac Ltd. (PFC) 1,505.00p -1.76%
ITV (ITV) 71.15p -1.52%
Kazakhmys (KAZ) 682.50p -1.44%
Eurasian Natural Resources Corp. (ENRC) 401.00p -1.43%
Man Group (EMG) 75.65p -1.37%
Weir Group (WEIR) 1,430.00p -1.31%
FTSE 250 - Risers
Northgate (NTG) 173.10p +4.91%
Centamin (DI) (CEY) 70.05p +4.40%
Amlin (AML) 335.60p +3.74%
Ruspetro (RPO) 153.00p +3.73%
Rank Group (RNK) 121.10p +3.50%
IG Group Holdings (IGG) 456.20p +1.92%
New World Resources A Shares (NWR) 312.10p +1.89%
Big Yellow Group (BYG) 282.60p +1.51%
Petra Diamonds Ltd.(DI) (PDL) 128.80p +1.34%
Cape (CIU) 266.10p +1.29%
FTSE 250 - Fallers
RPC Group (RPC) 370.10p -6.78%
Bumi (BUMI) 351.00p -3.84%
Spirit Pub Company (SPRT) 46.00p -3.66%
easyJet (EZJ) 486.20p -2.74%
Talvivaara Mining Company (TALV) 143.40p -2.45%
Redrow (RDW) 111.00p -2.37%
Fenner (FENR) 357.30p -2.32%
Aquarius Platinum Ltd. (AQP) 64.00p -2.29%
Regus (RGU) 87.70p -2.23%
Savills (SVS) 319.60p -2.17%